One of the largest, private for-profit hospital systems in the nation agreed to pay over $4.5 million to settle allegations that it violated various federal laws, including the False Claims Act (FCA). The healthcare corporation, Steward Health Care System LLC, owns multiple hospitals throughout Massachusetts. Although the hospital is in the Northeast, the basics of the settlement provide valuable information for systems throughout the country. The settlement included three key parts:
- Admission. The settlement includes an admission of guilt. The government required the system agree that its practices were in violation of federal laws like the FCA and that it accepted responsibility for these errors. This is not always present in these settlements, sometimes they will allow a settlement without an admission, but the government negotiated its inclusion within this settlement agreement.
- Payment. As noted above, the system will pay $4.735 million to resolve the claims.
- Oversite. The system has also agreed to a five-year Corporate Integrity Agreement. This essentially means the system will be subject to an annual review of its finances as outlined by the United States Department of Health and Human Services Office of the Inspector General (HHS-OIG)
The agreement covers actions that occurred between 2010 and 2022.
What fueled these allegations?
The government claims the system entered an unlawful agreement with specialty groups, including a group of physicians who specialized in cancer care and a urology group. The agreement required the physician groups administer specialty centers at one of their hospitals, a requirement that was allegedly never fulfilled and yet the government claims the hospital system still paid the groups as if they had met the obligations of the requirement.
Instead of any expectation to set up the centers, the government argued the agreements served as a cover for illegal kickbacks. The government also pointed to the system charging lower than market rental rates on properties used by physician groups to further their case.
What can other groups learn from this case?
In addition to having a basic understanding of how the government approaches settlement agreements, it is important to note the importance of contractual obligations. Review agreements with other groups and make sure the provisions are in line with applicable law. If not, make changes to help mitigate the risk of similar allegations.
The main takeaway: make sure your system is paying physicians for services they provide.
Attorney John Rivas is responsible for this communication